Chevron Faces Rare Bidding War in Industry That ‘Does Not Do Hostile’
(Bloomberg) -- How rare are bidding wars in the oil industry? Just ask the chief executive officer of Chevron Corp., now facing a potential fight to buy Anadarko Petroleum Corp.
According to Paul Sankey, managing director for Mizuho Securities USA LLC, Chevron’s Mike Wirth was asked at lunch last week about a rival offer for Anadarko. His response: “The industry does not do hostile bids.” Wirth then asked his questioner, “when was a major oil deal ever topped by a higher bid?”
“I blanked,” Sankey wrote.
The answer is that it’s pretty rare. A few recent examples are much smaller in size than the $38 billion counteroffer Occidental Petroleum Corp. made for Anadarko on Wednesday.
|Big Oil’s Infrequent Bidding Wars: |
“Competing bids are not typical,” Biraj Borkhataria, an analyst for RBC Capital Markets, said in a note Wednesday. He estimated Chevron could raise its $65 a share bid by $9 a share.
Sankey, meanwhile, wrote Wednesday that Chevron may add $5 to settle the deal, but also "might just tough this out” given the uncertainty surrounding shareholder approval for Occidental.
©2019 Bloomberg L.P.